Wednesday, September 19, 2012

Is there a tomorrow for USA Today?

USA Today celebrated its 30th anniversary last week with a plump commemorative edition and a meh facelift, but can it survive another 30 years? As a digital brand, potentially. As a print publication, probably not.

The third-largest newspaper in the country by circulation, USA Today admittedly is in a class by itself, as the only general-interest national newspaper. Its weekday distribution of 1.8 million trails the 2 million-plus circulation of both the Wall Street Journal, which specializes in business and financial news, and the New York Times, which is the house organ for global leaders in government, business, academia and the arts.

As USA Today commences its fourth decade, there is reason to wonder if its business model will be viable for another 30 years, given that it has lost its utility to its primary targets: business travelers and the advertisers seeking to reach them. Further, nearly two-thirds of its coast-to-coast circulation is built on free copies distributed by hotels and other businesses, meaning that barely more than a third of its readers actually think enough of the paper to pay for it. Before we get into any of this, however, let’s give the publishing venture – and the visionary who started it – their due.

USA Today was launched in 1982 by Al Neuharth, the swashbuckling chief executive of Gannett who forthrightly titled his subsequent autobiography “Confessions of an SOB.” He paid such meticulous attention to the details of the paper in its early days that he once famously ordered the news editors to remake the paper to move the picture of a bunch of cheerleaders higher on the front page. “Always put the [bleep] over the fold,” he barked at the editors, referring to a colloquial term for the female bosom that rhymes with “grits.” But I digress.

Although the print incarnation of USA Today seems somewhat retro in the age of iPads, Androids and Kindles, the original publication, in certain ways, presaged the web before we knew there was going to be one. At a time when newspapers were filled with long, gray columns filled with long, gray stories punctuated by an occasional black-and-white photo, USA Today was packed with brief articles, punchy headlines, color photos and an unprecedented array of infographics that made it a breeze to surf before we knew what surfing was. Traditional journalists, like me, scoffed at the idea that readers would prefer pie charts charting national pie preferences over 12 inches of yadda-yadda copy about how a certain committee tabled a certain study of some arcane topic for further study. But history proves that we were wrong. As detailed amusingly in the 1987 book “The Making of McPaper,” Neuharth’s immodest goal was to publish a newspaper you could get almost everywhere in the United States, and he achieved it by overcoming a host of technological and economic barriers to arrange the simultaneous printing of identical-looking editions at dozens of sites. To do this, he employed presses at both Gannett papers and those of other publishers – but only after forcing them all to add unprecedented color capacity and enforcing previously unimaginable standards for the quality of the results.

Although USA Today was an entity of a publicly held company, Neuharth brilliantly concealed from shareholders the magnitude of the losses the start-up undoubtedly incurred. One of his best ideas was to require individual Gannett papers to, ahem, donate staffers to the USA start-up team while continuing to pay them as though they were covering City Hall or selling papers in their home markets. This strategy, of course, did not relieve local publishers from achieving the ambitious profit targets prescribed by Gannett’s exacting bean counters. It therefore would be fair to say that Neuharth pioneered the modern art of doing more with less.

In the days when “targeting” newspaper circulation meant landing a paper on someone’s doorstep instead of under the bushes, Neuharth decided to aim the circulation of USA at well-compensated and expense-account-packing business travelers, who might find themselves boarding a flight in Chicago on Tuesday, waking up at a hotel in Knoxville on Wednesday and planning a trip to Houston on Thursday. To help travelers orient themselves to wherever they might be – or wherever they were going next – USA Today put a detailed, full-color weather map on the back page of the first section, ran a daily digest of major news from all 50 states, and published perhaps the most comprehensive collection of sports results in the land. The concept helped to fill the paper with ads for airlines trying to attract customers with such amenities as – and I am not making this up – the quality of their free, in-flight meals.

But that was then and this is now. Today, every major domestic airline but Southwest has nixed even free peanuts, and travelers pack not only expense accounts but also smart phones, tablets and laptops that track the weather, get all the news from home and let them watch video of everything from their kid’s Little League game to cricket in Pakistan. In other words, the onetime value of USA Today to the business traveler has been all but usurped. At the same time, profit-starved airlines are putting most of their marketing muscle into jockeying for position on pricing engines like Expedia and Kayak, instead of buying half-page print ads to stress the charms of their flight attendants.

The future of the print edition of USA Today is periled further by the fact that nearly two-thirds of its readership consists of free copies dropped outside of hotel rooms, given away at businesses or handed out to students. Only 36% of its papers each day are purchased by individuals who actually pay $1 to read it, according to the most recent report from the Audit Bureau of Circulations. Fully 52% of USA Today’s circulation goes to hotels, which purchase copies at deeply discounted rates as an amenity for their guests.

While a few hotels charge guests for delivering the paper to their rooms, most provide it for free. How long will hoteliers spend money to put the paper in front of rooms at night and pick up abandoned copies the next morning – especially when they can charge $15 a day for Internet access, so busy executives can check the weather and hometown news on their own mobile devices? Acting in concert or individually, a handful of hotel executives could wipe out the preponderance of the paper’s circulation overnight.

Far from being strategically concentrated in any given geographic area, USA Today’s circulation literally extends from sea to shining sea. As such, the paper is the antithesis of the sort of efficient and highly targeted advertising that a growing number of national (and local) brands prefer. Though USA Today managed to wrest a healthy number of congratulatory ads out of its vendors to fatten the commemorative edition, the paper is facing the same secular headwinds as every print or broadcast medium that relies on selling advertising by reach, instead of by the each.

The flip side of the paper’s success in establishing a national footprint means that USA Today is saddled with an enormous – and largely unavoidable – cost structure. Though USA Today was an industry leader in outsourcing printing and distribution via a national network of production partners, there are no easy ways to materially trim the costs of printing and distributing 1.8 million papers a day. While Neuharth could subsidize the launch of USA Today 30 years ago with the strong and steady profits reliably produced Gannett’s other newspapers, those publications today are battling weak ad sales and high operating costs of their own.

A major and ongoing dividend of the long-running investment in the print version of USA Today is that it prepared Gannett to compete in the digital age well ahead of most newspaper publishers. Not only was the graphics-rich meme of USA Today readily exportable to the web, but the brand also possessed the sort of high visibility and built-in recognition that other publishers could only envy. ComScore, the independent ratings service said that the 34.1 million unique visitors to the USA Today websites in May made it the fifth busiest of the general news sites. As large as its audience is, USA Today has more work to do to capitalize on the opportunity.

Coinciding with its birthday, USA Today put its web and mobile offerings in new and appealing Zite-lite packages. The actual content contained in those new packages, however, consists of a thin mix of aggregated and featherweight articles that seem to have been chosen more for their pageview-generating potential than for their journalistic significance. The result is that the aggregation is less complete than you get at Huffington Post, less illuminating than you get at Real Clear Politics, less stimulating than you get at Drudge Report and less newzy, breezy and sleazy than you can get at TMZ.

The next iteration of USA Today clearly is a work in progress, evidently hastened to market in time for the 30th anniversary by publisher Larry Kramer, the founder of MarketWatch who was recruited in May to run the organization. Even though there’s still a bit of time for Kramer to determine how to leverage the waning power of the print brand in the digital world, there can be no doubt that my esteemed friend knows there is little time to waste.

8 Comments:

Great summary of how USAT developed to this point, and the challenges ahead. To be fair with regard to your question about the print edition's viability 30 years hence, I strongly doubt that there will be any national newspapers still printed (literally) in 2042. The content and targeted audience just lend themselves too much to electronic distribution, even now. If we were talking about a small-town paper, the odds might be better. Even then, though, I would be surprised to see many traditionally printed papers in existence.

As far as your more general argument -- about the title's long-term viability -- there's more to agree with there. The USAT model, in terms of both content and distribution, is still viable. But the target is shrinking at the same time that alternatives are multiplying for both audience and advertisers.

Kramer is well equipped to move USAT onto the next leg of its journey. Whether Gannett will give him the resources necessary to succeed at that stage is another question; Gracia Martore is not Al Neuharth in either background or temperament. But, given Gannett's willingness to bear the cost of the current redesign and relaunch, I think there's hope.

I have been a print reader since the beginning...and the new format sucks... downright horrible...story type is almost agate. To small for older readers... and the make-up of the pages is a mess.... older version had some sparkle... new version is weak on black and color inks; page make-up is blah....and the number of pages has shrunk... also, the sports agate page is so small you need a magnifying glass to read

I remember how much my tribe of ”real” journalists derided USA Today when it was launched. I remember how much it changed the industry, how much we all learned from it and now, in retrospect, how forward-thinking it was for its time. That doesn’t mean I ever became a deep fan, but I came to appreciate what it dared to do (despite the derision).

Question now is can it go forward? Are the futuristic visions of just 30 years ago now so dated in this info-tech-econ upheaval as to park with the Guttenbergs?

Another way to look at this: If you were Al Neuharth now, and had the chutzpah to dare, what would you invent today for the next 30 years? Or even three?

Does anyone realize that the BLUE DOT on their masthead has been an icon for the National Inquirer for many years as their Lucky Charm...they run the same BLUE DOT, size and all, in their pages, if you rub on it, you are suppose to have good luck. Maybe that is why they copied it...

I am also a paid subscriber who got a headache half way through today's edition from trying to read the awful new print. I thought a new design would not matter since I am such a big USA Today fan, but it does, and making it harder to read sure defeats the purpose. I hope the readers let them know they took a huge step backwards.

The folks USAT are very focused on digital - over a year ago they brought on two digital news innovators in David Payne and Mitch Gelman -- CNN Digital alums that lead the way for that brand for years.

A side note on the founding of USA Today.When local reports were brought in from other parts of the country to work in D.C. for the opening, they put them up in (appropriately for Gannett) small apartments, which the staffers promptly dubbed Stay Free Mini Pads.As to being around 30 years from now, what newspaper will be around?

About Me

Alan D. Mutter is perhaps the only CEO in Silicon Valley who knows how to set type one letter at a time.
Mutter began his career as a newspaper columnist and editor at the Chicago Daily News and later rose to City Editor of the Chicago Sun-Times. In 1984, he became No. 2 editor of the San Francisco Chronicle.
He left the newspaper business in 1988 to join InterMedia Partners, a start-up that became one of the largest cable-TV companies in the U.S.
Mutter was the COO of InterMedia when he moved to Silicon Valley in 1996 to join the first of the three start-up companies he led as CEO.
The companies he headed were a pioneering Internet service provider and two enterprise-software companies.
Mutter now is a consultant specializing in corporate initiatives and new media ventures involving journalism and technology. He ordinarily does not write about clients or subjects that will affect their interests. In the rare event he does, this will be fully disclosed.
Mutter also is on the adjunct faculty of the Graduate School of Journalism at the University of California at Berkeley.